The Role of Audit Quality in Enhancing the Market Consequences of Voluntary Disclosure: Analysis in Different Reporting Environment in Asia

• In Event: Reception with ELS Posters
  In Poster Session: Research Poster Session I and Friday Reception

Abstract

This research aims to investigate the role of auditor in enhancing market consequences of increased voluntary disclosure in countries with different reporting environment. This research use Asia context that covers India, Indonesia, Japan, Malaysia, Philippines, Singapore and Thailand. Those countries have different characteristics, mainly concerning law systems and accounting standard. This research use four measurement of market consequences, namely cumulative abnormal return, volatility of return, bid ask spread, and trading volume. The result shows that voluntary disclosure gives positive consequences to capital market by increasing the cumulative abnormal return, increasing average trading volume, and decreasing asymmetric information. This research shows that in general, that auditor plays a significant role in increasing the credibility of voluntary disclosed information by increasing the market consequences of increased disclosure. The result shows that higher quality of reporting environment cannot increase the market consequences of increased voluntary disclosure. The result also shows that the role of auditor in increasing the effect of increased voluntary disclosure, by decreasing asymmetric information, is higher in a country that adopt international best practice in financial reporting.

Author

• Ratna Wardhani, Universitas Indonesia